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Tweezer top forex

tweezer top forex

Tweezer Top is a two-candle pattern that signifies a potential bearish reversal. The pattern is found during an uptrend. The first candle is long and green. Market trend has moved 30 pips higher than the entry price. Just after that trend, another Tweezer Top has formed. A Bullish Shooting star formed just after a. Tweezer tops and bottoms are reversal candlestick chart patterns that happen at the top of uptrends and bottom of downtrends. MAKE BETTER PLACE MICHAEL JACKSON LYRICS

Less frequently tweezers appear in downtrends when the market makes a short bullish swing but resumes a downwards trend see the chart in Figure 3. For that reason we have to separate the likely continuation setups from the reversals. Meaning of the Tweezer Top As with other candlestick patterns, the tweezer top generally only signals what may happen in the next few bars ahead.

If we break down the pattern into its parts, the first candlestick in the pair opens low and closes high. The next candlestick opens at or near the same level but the price then falls. This means the market fails to make any upward price movement at that point.

In other words, either buyers are abstaining or selling is increasing. The bearish candlestick in the pair represents a break in the trend where the market is prone either to a correction or a consolidation. As the chart in Figure 2 shows, the tweezer tops are also borderline engulfing patterns.

Here the bearish bar is almost entirely engulfing the bullish and is drawing the price lower. After the first tweezer we then see the market rising higher again. Reliability of the Tweezer The tweezer pattern is a weak reversal signal. The market is bullish at this time but the trend weakens and it starts to form a top.

We can see three tweezer top pairs, marked with red arrows, as the price proceeds to rise in the trend. Both of the highs form into a characteristic tweezer. The second appears to be the stronger signal because the bearish candlestick engulfs the bullish with a strong correction. The market then falls off sharply and a second tweezer top forms in the decline as the market starts a bear rally. Each of these formations has varying degrees of strength. A clear uptrend should be present.

Both candles must reach the same high point. Once you have an uptrend, simply look for candles that have the same highs. The bulls were not willing to buy above that highest price, so the bears returned and overpowered the bulls, pushing the price back down. Since two or more candles formed shadows at this same level confirms the strength of the resistance and shows that the uptrend has likely paused or worse, has reversed into a downtrend.

Like the Tweezer Bottom , the Tweezer Top is viewed as a reversal pattern. To better analyze a specific Tweezer Top, observe the following: If the Tweezer Top appears at market highs, it is more reliable.

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Interpretation Essentially, tweezer tops signal forthcoming downward price action. The pattern suggests that opening a short position is appropriate. This may be done in two ways: Taking a short against an uptrend in anticipation of market reversal. Opening a short position on a market pullback with an established bearish trend. The tweezer top is no different. All you need to do is define your market entry point, locate stop losses, and set profit targets.

After that, trade execution is routine. Market Entry Tweezer tops are bearish reversal indicators. So, the pattern suggests that selling the market may be appropriate. To enter the market, place a sell order beneath the second candle of the series. Upon the sell order being filled, a new short position will be opened in the market. Stop Loss The second step in trading tweezer tops is to locate your stop loss.

Remember, this formation is a signal of forthcoming bearish price action. Thus, your stop loss should be placed above the pattern itself. To place a stop loss, locate your stop-out point above the upper extreme of the pattern. This will be a buy order that cancels the active short position. Profit Target With the tweezer top, profit targets are set beneath the formation. This is done to capture the downward price action. In forex, there are many ways to set take profit levels.

Risk vs. Also, technical indicators or support and resistance levels can be helpful. The choice is yours! This tweezer top trade was executed as follows: The pattern was identified. A sell order was placed beneath the second candle at 1. A profit target was set at 1.

A pip gain was realized upon the profit target being hit. The Tweezer Top Vs. The Tweezer Bottom Candlestick Pattern Although both the tweezer top and tweezer bottom are variations of a reversal pattern, there are some key differences. Below are a few of the most important: A tweezer top is a bearish reversal pattern. It signals a selling opportunity. A tweezer bottom pattern is a bullish reversal pattern. It signals a buying opportunity.

If you will open a higher timeframe, you will get a bearish pin bar on a higher timeframe indicating the trend reversal. This is how you should try to read the price to identify a valid tweezer top pattern. How to trade tweezer top candlestick?

According to backtest results, tweezer top candlestick alone cannot be used to get profit from the forex market. Because during ranging market conditions, a lot of false candlestick patterns will form. So to avoid false price patterns, we have added two confluences Resistance zone Fibonacci golden zone You can also add your own confluences to make a profitable strategy based on the tweezer top pattern.

Tweezer top candlestick at Resistance zone The resistance zone on the price chart has the potential to reverse the price trend. But if a tweezer top will form at the resistance zone then the potential of both price patterns will combine resulting in high probability trade setups.

Pro Tip: The candlestick patterns that give a false breakout by a wick or Shadow at the Resistance zone and then close below the resistance level have a high probability of trend reversal.

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